Iraq's Ministry of Electricity announced on Tuesday that it will settle its gas dues to Iran within two days.
Ahmed Musa, the ministry spokesman, made the statement in an interview with Iraqi News Agency.
“We announce today that the dues [to Iran] for 2020 will be paid within two days in accordance with the approved contexts to prevent a decrease in the quantity of gas flowing to Iraq,” he was quoted as saying.
Musa indicated that the gas dues crisis has exacerbated through previous governments, but the current Iraqi government is taking responsibility to solve it.
He added that the current government is working to address the remaining problems and is trying to find solutions by borrowing to pay Tehran’s dues.
He expressed gratitude for the efforts and supervision of Prime Minister Mustafa Al-Kadhimi to solve this issue and stressed the role of the Iraqi Parliament is supporting the power ministry.
Earlier this month, the electricity ministry said Iran had reduced five million cubic meters of the gas it exports to the Arab neighbor, resulting in hours of power cuts.
Although Iran demanded the Iraqi government fulfil its financial obligations, Baghdad could not approve the 2022 budget as the political parties have not yet reached consensus to form a new government and elect a president.
Iraq has not paid its 2020 arrears because of the complex mechanism its authorities are forced to follow to be eligible for waivers from the unilateral US sanctions imposed on Iran.
In another update, Iraqi Finance Minister Ali Allawi expressed support for the emergency bill passed by parliament last week allocating 25 trillion dinars ($17 billion) to support the agriculture and energy sectors and cover payments of additional public sector workers.
It also includes 4 trillion dinars ($2.7 billion) to repay debts to Iran for gas and electricity imports, which would theoretically help mitigate supply disruptions that have hit electricity supplies during the sweltering heat, Oil Reporter said.
In December the National Iranian Gas Company said Iraq owes more than $6 billion in unpaid energy bills. The debt includes $2 billion in arrears and $1 billion in contract violations. Three billion dollars are blocked by the Trade Bank of Iraq, due to the US economic blockade and tough banking restrictions.
Iran has exported 65 billion kilowatt-hours of electricity to Iraq since 2005 worth an estimated $6.2 billion. The neighbor is one of the biggest regional markets for Iranian energy export. Twenty million cubic meters of gas is also exported every day (worth $200 million a month).
Iraqi debt to Iran for electricity and natural gas imports has surpassed $5 billion, Hamid Hosseini, a board member of the Iranian Oil, Gas and Petrochemical Exporters Association said last week.
